ROAS, CPM, CPC and CTR Calculator

An advertising dashboard is full of ratios that sound alike: ROAS, ACOS, CPM, CPC, CTR, CPA. Each one answers a different question, and one of them, ROAS, means little without a second number that the dashboard does not show: how much of each sale is margin. This page computes all of them from five or six figures, and adds the break-even ROAS, so you can tell whether a campaign is working or just spending.

What the ratios mean

ROAS, return on ad spend, is the revenue the ads brought divided by what they cost. ACOS, advertising cost of sale, is the same two numbers the other way up. CPM is the cost of a thousand impressions, CPC the cost of a click, and CTR the share of impressions that became clicks. Conversion rate is the share of clicks that ended in an order, CPA the cost per order, and average order value the revenue per order.

Why margin decides

If your gross margin is 40%, then 60% of each sale goes to the product. A ROAS of 2.5 therefore means that the ad cost, 1, plus the product cost, 1.5, equals the revenue, 2.5, and you break even. Below that you lose on every sale. Above it you earn the difference. The break-even ROAS is one divided by the margin, and entering your margin lets the page compute it and the profit after ad spend.

A worked example

The default is 5,000 of spend that brought 22,500 of revenue, from 400,000 impressions, 6,000 clicks and 300 orders, on a 40% margin. ROAS is 4.50 and ACOS 22.22%. The break-even ROAS is 2.50, so the campaign is well above it, and the profit after ad spend is 22,500 × 40% − 5,000 = 4,000. CPM is 12.50, CPC 0.83, CTR 1.50%, the conversion rate 5.00%, CPA 16.67 and average order value 75.00. The second sample is an awareness campaign with 1,200 spent, 900,000 impressions, 3,600 clicks and no sales or margin. Only the metrics that can be worked out appear: CPM 1.33, CPC 0.33 and CTR 0.40%.

How the ratios connect

They are linked, so a change in one explains another. CPC equals CPM divided by 1,000 and by CTR, because a higher click-through rate spreads the same impression cost over more clicks. CPA equals CPC divided by the conversion rate. Revenue per click is the conversion rate times the average order value. When a campaign’s ROAS falls, look at which of these moved, rather than changing everything at once.

Edge cases

Ad spend must be above zero. If clicks are higher than impressions or conversions higher than clicks, the page says so, because the inputs are not consistent. A conversion count of zero shows a dash for CPA and average order value. Adding only the spend shows a note asking for more data. A margin of 100% gives a break-even ROAS of 1.00.

Limits

Revenue is whatever you enter. The page does not know how an ad platform attributes sales across channels, what happens over a longer period, or whether a customer would have bought without the ad. Repeat purchases are also ignored: a campaign that loses money on the first order can still pay if the customer buys again, and the lifetime value tools help with that question.

Related tools

• E-Commerce Profit Calculator builds the margin that this page needs from every cost of an order.
• Email Marketing ROI and Click Rate Calculator measures a different channel with similar ratios.
• ROI Calculator states a return as a plain percentage.
• SaaS Metrics Calculator takes acquisition cost further into lifetime value.